To fix a problem like foreclosure we have to look at its causes which involve in our case as U.S. citizens a lot of bad judgment. This lack of properly analyzing business deals is a fault laid on both the consumers (or homeowners rather), and the financing companies such as banks and lenders. On the side of the banks and lenders we have things like loans over the value of the home, ridiculous variable interest rates that make it nearly impossible to pay the mortgage back and approving loans for homeowners with low and unstable income. On the side of the homeowners the list is nearly endless so to name a few key issues we have to stop counting eggs before they hatch, live within our means, not be so greedy and read the fine print.
In many instances you will have a homeowner requesting an outrageous mortgage loan on a home that is not worth the amount of the loan to begin with, but the bank in good faith of the homeowner’s credit follows thru only to have the former homeowner take the money and give up the house. Then there are those who jump into a business deal but don’t understand the major details which usually seem so minor written in all that fine print. You could say that is a case of a lender taking advantage of an ill prepared homeowner but if one is going to make a business deal they should be knowledgeable of that deal. Homeowners need to focus on understanding every detail of the contracts they enter and lenders should provide mandatory education to their prospective mortgage recipients of every aspect of the deal they will be making. It would not be a bad idea either if a test posed of questions that a mortgage recipient should know the answers to was a mandatory part of the process as well.
With the common homeowners there are really so many reasons that foreclosure occurs (like divorce, illness, injury, unemployment, death in the family, or just bad money management) that there is no point in addressing all of these but rather focus should be directed at the main source of the problem. The problem we have undeniably is the need to take these loans out to begin with. Those needs vary as well from simple things like fixing a wrecked car or renovating part of your home, into more complicated issues like sending a child to college, taking care of a loved one’s funeral arrangements, or even bailing a bad apple out of jail. One more need for a mortgage loan that comes to mind is one that deserves an intense degree of attention and that is the desire of a homeowner to start their own business. When applying for a mortgage loan the actual need for the loan should thoroughly be accessed as to prevent an unnecessary burden on an anxious homeowner.
The approval of a mortgage loan or any loan for that matter should not be based solely on credit, but rather should rely on every aspect of how the loan will be used and how the recipient will be clearing the debt. If a homeowner for instance desires to take out a loan on their house then...